Quote:
Originally Posted by Enoch Root
This thread is hilarious.
I have said - in every one of my posts - that I am not debating discount rates or the time value of money. And in every single rebuttal, people try to explain the time value of money to me. I understand NPV as well as anyone on this board. That isn't the point here.
The point is this: on all contracts up to 8 years, there is NO discounting of cash flows - you want to front load, you want to back load - that's up to you. BUT THE CAP IS CALCULATED AS THE AVERAGE OF THE NOMINAL VALUES, REGARDLESS OF TIMING. Full stop. Does everyone understand this simple point? Good, let's carry on... However, if you go one day longer, as this contract has, you get to discount some of the cash flows. That makes the cap calculation of this contract different than all contracts that don't go beyond 8 years. It's a very simple statement, it really shouldn't be that hard to understand.
(I can't wait for people to tell me again, that future payments are worth less than current payments - that will be fun to read!)
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No it doesn’t change the way the cap hit is calculated, all contracts calculate the cap hit based on the NPV of the salary in the year the Salary is earned. All contracts need to be compliant with front loading and back loading rules for th year the salary is earned.
The deferred contracts only change when money is paid out to the player, it does not change when the salary is earned.
Thats the best I can do without talking discount rate.